The genomic DNA in living cells is organized into a chromatin structure that controls the accessibility of various regulatory enzymes to their target sites. Yeast genetic and biochemical experiments implicate that the multisubunits SWI/SNF complex utilizes ATP-derived energy to regulate the chromatin structure (chromatin remodeling). The mammalian homologue of the yeast SWI/SNF complex is called BAF complex , which is involved in cellular proliferation and differentiation. We have investigated the mechanisms of the BAF complex in modifying chromatin structure and regulation of transcription. Using DNA microarrays containing 22,000 cDNA or EST sequences, we show that the BAF complex activates 80 genes and represses 2 genes in SW-13 cells. Because of the small percentage of genes altered by ectopic expression of BRG1, we envisaged that the BAF complex is recruited to its target genes by specific mechanisms. We demonstrate that the colony-stimulating factor 1 (CSF1) is a direct target gene of the BAF complex and its activation by the BAF complex requires formation of proper chromatin structure. We show that the NFI/CTF family of transcription/replication factors is required for the recruitment of the BAF complex to the CSF1 promoter. In studying the CSF1 promoter, we discovered a TG repeat important for the activation of the promoter. Such sequences have the potential to form Z-DNA structure. Thousands of copies of Z-DNA-forming sequences exist in the mammalian genome; however, the biological function of the Z-DNA structure has not been established. We show that the TG repeat sequence of the CSF1 promoter is converted to a Z-DNA structure in vivo only in cells expressing the CSF1 gene. The formation of the Z-DNA structure is required for the activation of the CSF1 promoter by the BAF complex. We propose that formation of Z-DNA structure facilitates the opening of chromatin structure by the BAF complex.